Federal Acquisition Regulation: Protests of Orders Set Aside for Small Business, 61333-61337 [2024-16282]

Agencies

• DEPARTMENT OF DEFENSE
• General Services Administration
• National Aeronautics and Space Administration

[Federal Register Volume 89, Number 146 (Tuesday, July 30, 2024)]
[Rules and Regulations]
[Pages 61333-61337]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-16282]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 19

[FAC 2024-06; FAR Case 2021-009, Item II; Docket No. FAR-2021-0010; 
Sequence No. 1]
RIN 9000-AO26


Federal Acquisition Regulation: Protests of Orders Set Aside for 
Small Business

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the 
Federal Acquisition Regulation (FAR) to implement regulatory changes 
made by the Small Business Administration to update and clarify 
requirements associated with size and socioeconomic status protests in 
connection with multiple-award contract set-asides and reserves, and 
orders placed under multiple-award contracts.

DATES: Effective August 29, 2024.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact 
Ms. Dana Bowman, Procurement Analyst, at 202-803-3188 or by email at 
[email protected]. For information pertaining to status or 
publication schedules contact the Regulatory Secretariat Division at 
202-501-4755 or [email protected]. Please cite FAC 2024-06, FAR Case 
2021-009.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 88 FR 68067 on October 3, 2023, to implement regulatory 
changes made by the Small Business Administration (SBA) in its final 
rules published in the Federal Register on October 2, 2013 (78 FR 
61113), October 16, 2020 (85 FR 66146), and on November 29, 2022 (87 FR 
73400). For further details, please see the proposed rule. One 
respondent submitted comments on the proposed rule.

II. Discussion and Analysis

    The Civilian Agency Acquisition Council and the Defense Acquisition 
Regulations Council (the Councils) reviewed the public comments in the

[[Page 61334]]

development of the final rule. A discussion of the comments and the 
changes made to the rule as a result of those comments are provided as 
follows:

A. Summary of Significant Changes

    The following significant changes from the proposed rule are made 
in the final rule: The final rule amends FAR 19.302(d)(1) to add a new 
paragraph (ii)(C), which reflects language in SBA's October 16, 2020, 
final rule at 13 CFR 121.1004(a)(2)(ii) and specifies when a protest is 
due for orders placed under multiple-award contracts where the 
contracting officer requested rerepresentation for the order. In 
addition, the final rule FAR text at FAR 19.306(e)(1)(iii), 
19.307(e)(1)(v), and 19.308(e)(1)(iii) is amended to clarify when a 
protest is due when written notification is not required and other 
communication means are used.

B. Analysis of Public Comments

    Comment: The respondent recommended revising the proposed rule text 
at FAR 19.302(a)(2) to add a reference to SBA's regulations at 13 CFR 
121.1001(a)(1) to provide significant clarity to the acquisition 
community, including small businesses.
    Response: The final rule text at FAR 19.302(a)(2) includes a 
reference to SBA's regulations at 13 CFR 121.1001(a), which specify the 
parties that may protest the small business representation of an 
offeror in a specific offer for a contract and the parties that can 
protest competitive contracts. Therefore, to change the reference at 
FAR 19.302(a)(2) to 13 CFR 121.1001(a)(1) would omit the inclusion of 
the remaining paragraphs under paragraph (a), which are relevant to 
this FAR section.
    Comment: The respondent recommended revising the proposed rule FAR 
text at 19.302(d)(1) to state each of the types of contracts and orders 
that are subject to the SBA's five-day protest deadline. (See 13 CFR 
121.1004(a)(2)).
    Response: The final rule FAR text at 19.302(d)(1)(i) and (ii) 
specifies the types of contracts and orders subject to the SBA five-day 
protest deadline. In addition, the final rule FAR text at 19.302(d) 
directs contracting officers to 13 CFR 121.1004 for SBA's regulations 
on timeliness.
    Comment: The respondent stated that the FAR text should capture the 
language regarding certifications and recertifications that is stated 
in the SBA rules at 13 CFR 121.1004(a)(2)(ii).
    Response: The final rule text has been revised to adopt this 
recommendation at FAR 19.302(d)(1)(ii)(C).
    Comment: The respondent recommended revising the proposed rule FAR 
text at 19.302(d)(1) to remove the word ``special'' and the reference 
to FAR 15.503(a)(2) because 13 CFR 121.1004(a)(2) does not mention 
either. The respondent stated that this may confuse rather than clarify 
the timeliness rules for small businesses. The respondent provided an 
example of an instance when a contracting officer could provide notice 
of the identity of the apparently successful offeror, but the notice 
may not meet the requirements of FAR 15.503(a)(2), which could lead to 
confusion as to whether the five-day clock began.
    Response: The special notification at FAR 19.302(d)(1) aligns with 
FAR 15.503(a)(2), which requires the contracting officer to provide 
preaward notices to offerors for small business set-asides made 
pursuant to FAR subpart 19.5, or the procedures in sections 19.1305, 
19.1307, 19.1405, or 19.1505. This notification is referred to as a 
``special notification''; therefore, it is not necessary to modify the 
text to align with SBA's regulations. The rule did not amend this text 
or the reference, rather the rule merely moved the reference to 
immediately follow ``special notification from the contracting 
officer'' for clarity. While 13 CFR 121.1004(a)(2) does not use the 
term ``special'' or reference FAR 15.503(a)(2), the FAR provides 
guidance to contracting officers using terminology specific to Federal 
procurement.
    Comment: The respondent stated it is unclear if the text at 
19.302(d)(5) refers to protests challenging a firm's size at the time 
the firm submitted its application for a Schedule contract, or if the 
text is meant to challenge a firm's size at the time the firm submitted 
its application for set-aside orders under Multiple Award Schedule 
contracts. The respondent suggests revising the FAR text at 
19.302(d)(5) to add the following language: ``A protest under a 
Multiple Award Schedule will be timely if received by SBA at any time 
prior to the expiration of the contract period, including renewals.'' 
(emphasis added).
    Response: The suggested revision to add ``at any time'' is in the 
existing FAR text at 19.302(d)(5).
    Comment: The respondent recommended revising the FAR text at 
19.306, 19.307, and 19.308 to implement SBA regulations at 13 CFR 
126.801(d), 13 CFR 134.1004(a), and 13 CFR 127.603(c), respectively, to 
specify when protests are due for orders placed under multiple-award 
contracts where the contracting officer requested rerepresentation. The 
respondent believes the proposed changes will provide significant 
clarity to the acquisition community, including small businesses.
    Response: The final rule implements SBA's regulations 13 CFR 
126.801(d), 13 CFR 134.1004(a), and 127.603(c) at FAR 
19.306(e)(1)(ii)(A), 19.307(e)(1)(ii)(A), and 19.308(e)(1)(ii)(A), 
respectively.
    Comment: The respondent recommended revising the proposed rule FAR 
text at 19.306, 19.307, and 19.308 to make clear that for negotiated 
procurements, the fifth business day deadline applies to contracts that 
are set aside for HUBZone, small business firms, Service-Disabled 
Veteran-Owned Small Business (SDVOSB) firms, Women-Owned Small Business 
(WOSB) firms, and Economically-Disadvantaged Women-Owned Small Business 
(EDWOSB) firms, not only for set-aside orders placed under multiple-
award contracts, in accordance with 13 CFR 121.1004(a)(2). The 
respondent states that the FAR text should use similar language and 
make clear that the five-business day deadline applies to HUBZone, 
SDVOSB, WOSB, and EDWOSB set-aside contracts.
    Response: FAR 19.306, 19.307, and 19.308 address the procedures for 
protesting a firm's status as a HUBZone small business concern, an 
SDVOSB concern, an EDWOSB concern or a WOSB concern, respectively. The 
final rule FAR text at 19.306(e)(1)(ii), 19.307(e)(1)(ii), and 
19.308(e)(1)(ii) specifies, for negotiated acquisitions, that an 
interested party shall submit its written protest to the contracting 
officer by the close of business on the fifth business day after 
notification by the contracting officer of the apparently successful 
offeror.
    Comment: The respondent recommended changing the term 
``rerepresentation'' in the FAR text at 19.306(e)(1)(ii)(A), 
19.307(e)(1)(ii)(A), and 19.308(e)(1)(ii)(A) to ``recertification'' to 
ensure consistency and to avoid confusion. The respondent indicated 
that the SBA regulations refer to recertification, as opposed to 
rerepresentation, and that the SBA has developed case law regarding 
what constitutes a request for recertification.
    Response: The FAR does not automatically replicate terminology used 
in SBA's regulations. In this case, the FAR has long used the terms 
``representation'' and ``rerepresentation'' in lieu of the terms 
``certification'' and ``recertification'' to describe how an entity 
addresses its size status. This difference is consistent with a 
longstanding policy, set forth at 41 U.S.C. 1304(b) and FAR 1.107, to 
limit

[[Page 61335]]

the use of certification requirements in the FAR.
    Comment: The respondent recommended deleting the FAR text at 
19.306(e)(1)(iii), FAR 19.307(e)(1)(iii), and FAR 19.308(e)(1)(iii) and 
adding a new subsection (e)(3) to each for clarity and accuracy.
    Response: The final rule FAR text at 19.306(e)(1)(iii), FAR 
19.307(e)(1)(v), and FAR 19.308(e)(1)(iii) align with the opening 
paragraph at 19.306(e)(1) and that of the text at FAR 
19.302(d)(1)(iii). Therefore, it is not necessary to add a new 
subsection (e)(3).
    Comment: The respondent recommended revising the proposed rule FAR 
text at 19.306, 19.307, and 19.308 to implement SBA's regulations at 13 
CFR 126.801(d), 13 CFR 134.1004(a), and 13 CFR 127.603(c), 
respectively, to specify when protests are due for orders that are set 
aside for HUBZone, SDVOSB, WOSB, and EDWOSB firms under a multiple-
award contract that is not itself partially or totally set-aside or 
reserved for the particular concern. This does not apply to orders and 
blanket purchase agreements placed under Federal Supply Schedule 
contracts.
    Response: The final rule FAR text at 19.306 (e)(1)(ii), 
19.307(e)(1)(v), and 19.308(e)(1)(ii) implements SBA's regulations 13 
CFR 126.801(d), 13 CFR 134.1004(a), and 13 CFR 127.603(c), 
respectively.

C. Other Changes

    The final rule FAR text at 19.306(e)(1)(ii), 19.307(e)(1)(ii), and 
19.308(e)(1)(ii) has been revised to conform with the FAR text at 
19.302(d)(1)(ii) regarding the receipt of the special notification from 
the contracting officer for negotiated acquisitions. In addition, the 
final rule FAR text at 19.302(d)(1)(ii)(A), (B), and (C), 
19.306(e)(1)(ii)(A) and (B), 19.307(e)(1)(ii)(A) and (B), and 
19.308(e)(1)(ii)(A) and (B) is revised to remove ``indefinite-delivery 
indefinite-quantity (IDIQ)'' and ``IDIQ'' as it is unnecessary to 
specify either since the definition of multiple-award contract at FAR 
2.101 includes IDIQ contracts.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT), for Commercial Products (Including Commercially 
Available Off-the-Shelf (COTS) Items), or for Commercial Services

    This rule does not create new solicitation provisions or contract 
clauses or impact any existing provisions or clauses.

IV. Expected Impact of the Rule

    This rule is expected to impact the Government, offerors, and 
contractors.
    This final rule provides processes and procedures for filing size 
and socioeconomic status protests associated with multiple-award 
contracts that are partially set-aside for small businesses or that 
include reserves for small businesses and orders placed under multiple-
award contracts, with the exception of orders and blanket purchase 
agreements placed under Federal Supply Schedule contracts in accordance 
with FAR 8.405. Prior to this rule, the FAR did not specify unique 
procedures for protests associated with these types of contract 
actions.
    By clarifying the protest processes and procedures, this rule is 
expected to help contracting officers and interested parties understand 
the requirements for filing size and socioeconomic status protests for 
certain multiple-award contracts and orders placed under multiple-award 
contracts. Therefore, any impact is expected to be beneficial to the 
Government, contractors, and offerors.

V. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 (as amended by E.O. 14094) and 13563 
direct agencies to assess the costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety effects, distributive 
impacts, and equity). E.O. 13563 emphasizes the importance of 
quantifying both costs and benefits, of reducing costs, of harmonizing 
rules, and of promoting flexibility. This is not a significant 
regulatory action and, therefore, was not subject to review under 
section 6(b) of E.O. 12866, Regulatory Planning and Review, dated 
September 30, 1993.

VI. Congressional Review Act

    Pursuant to the Congressional Review Act, DoD, GSA, and NASA will 
send this rule to each House of the Congress and to the Comptroller 
General of the United States. The Office of Information and Regulatory 
Affairs (OIRA) in the Office of Management and Budget has determined 
that this rule does not meet the definition in 5 U.S.C. 804(2).

VII. Regulatory Flexibility Act

    DoD, GSA, and NASA have prepared a Final Regulatory Flexibility 
Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 
U.S.C. 601-612. The FRFA is summarized as follows:

    DoD, GSA, and NASA are issuing a final rule to amend the Federal 
Acquisition Regulation (FAR) to implement regulatory changes made by 
the Small Business Administration (SBA) in its final rules published 
on October 2, 2013 (78 FR 61113), October 16, 2020, (85 FR 66146), 
and on November 29, 2022 (87 FR 73400). This rule provides processes 
and procedures associated with size and socioeconomic protests 
related to partial set-asides and reserves of multiple-award 
contracts, and protests related to orders placed against multiple-
award contracts, with the exception of blanket purchase agreements 
and orders placed under Federal Supply Schedule contracts.
    There were no significant issues raised by the public comments 
in response to the initial regulatory flexibility analysis.
    This final rule will impact small businesses who are or may 
become multiple-award contract holders and who may be awarded orders 
under multiple-award contracts. According to data from the Federal 
Procurement Data System, in the last three fiscal years (FYs), 
agencies set aside orders for small businesses under unrestricted 
multiple-award contracts as follows: 8,336 in FY 2021; 7,463 in FY 
2022; and 7,271 in FY 2023; for an average of 7,690 per fiscal year. 
In the last three fiscal years, agencies also further set aside 
orders under set-aside multiple-award contracts as follows: 10,641 
in FY 2021; 11,635 in FY 2022; and 15,260 in FY 2023; for an average 
of 12,512 per fiscal year. In addition, in the last three fiscal 
years, agencies further set-aside orders for small businesses under 
a socioeconomic category under the set-aside portion of a multiple-
award contract, where the socioeconomic category differs from the 
underlying multiple-award contract, as follows: 2,060 in FY 2021; 
1,977 in FY 2022; and 2,213 in FY 2023; for an approximate average 
of 2,083 per fiscal year. In the last three fiscal years contracting 
officers required rerepresentation for orders as follows: 453 in FY 
2021; 975 in FY 2022; and 938 in FY 2023, which averages out to 
approximately 789 per fiscal year.
    Although we can estimate the number of set-aside orders that may 
be affected by this rule, it is not possible to estimate the number 
of protests; therefore, it is not possible to estimate the number of 
small entities that may be affected by this rule.
    This rule clarifies the requirements for filing size and 
socioeconomic status protests for orders placed under multiple-award 
contracts resulting in reduced ambiguities of the process and 
increased efficiencies for small entities.
    This rule does not include any new reporting, recordkeeping, or 
other compliance requirements for small entities.
    There are no known significant alternative approaches that would 
accomplish the stated objectives.

    Interested parties may obtain a copy of the FRFA from the 
Regulatory Secretariat Division. The Regulatory Secretariat Division 
has submitted a copy of the FRFA to the Chief Counsel for Advocacy of 
the Small Business Administration.

[[Page 61336]]

VIII. Paperwork Reduction Act

    This rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget under 
the Paperwork Reduction Act (44 U.S.C. 3501-3521).

List of Subjects in 48 CFR Part 19

    Government procurement.

William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-wide Policy.

    Therefore, DoD, GSA, and NASA amend 48 CFR part 19 as set forth 
below:

PART 19--SMALL BUSINESS PROGRAMS

0
1. The authority citation for part 19 continues to read as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C. 
chapter 137 legacy provisions (see 10 U.S.C. 3016); and 51 U.S.C. 
20113.


0
2. Amend section 19.302 by--
0
a. Removing from the end of paragraph (a)(2) the text ``or the SBA.'' 
and adding the text ``or SBA. See 13 CFR 121.1001(a).'' in its place; 
and
0
b. Revising paragraph (d).
    The revision reads as follows:


19.302   Protesting a small business representation or 
rerepresentation.

* * * * *
    (d) In order to affect a specific solicitation, a protest must be 
timely. SBA's regulations on timeliness are contained in 13 CFR 
121.1004. SBA's regulations on timeliness related to protests of 
disadvantaged status are contained in 13 CFR part 124, subpart B.
    (1) To be timely, a protest by any concern or other interested 
party must be received by the contracting officer by the close of 
business of the fifth business day after--
    (i) Bid opening for sealed bid acquisitions; or
    (ii) Receipt of the special notification from the contracting 
officer (see 15.503(a)(2)) that identifies the apparently successful 
offeror for negotiated acquisitions, including--
    (A) Partial set-asides and reserves of multiple-award contracts;
    (B) Orders that are set-aside under an unrestricted multiple-award 
contract (except for orders and blanket purchase agreements placed 
under a Federal Supply Schedule contract (see 8.405 and paragraph 
(d)(5) of this section)); and
    (C) Orders placed under multiple-award contracts where the 
contracting officer requested rerepresentation for the order; or
    (iii) Receipt of notification using other communication means when 
written notification is not required.
    (2) A protest may be made orally if it is confirmed in writing and 
received by the contracting officer within the 5-day period or by 
letter postmarked no later than 1 business day after the oral protest.
    (3) A protest may be made in writing if it is delivered to the 
contracting officer by hand, mail, facsimile, email, express or 
overnight delivery service.
    (4) Except as provided in paragraph (d)(6) of this section, a 
protest filed by the contracting officer or SBA is always considered 
timely whether filed before or after award.
    (5) A protest under a Multiple Award Schedule will be timely if 
received by SBA at any time prior to the expiration of the contract 
period, including renewals.
    (6) A protest filed before bid opening, or notification to offerors 
of the selection of the apparent successful offeror, will be dismissed 
as premature by SBA.
* * * * *

0
3. Amend section 19.306 by--
0
a. Removing from the end of paragraph (e)(1)(i)(B) the word ``or''; and
0
b. Revising paragraph (e)(1)(ii) and adding paragraph (e)(1)(iii).
    The revision and addition read as follows:


19.306   Protesting a firm's status as a HUBZone small business 
concern.

* * * * *
    (e) * * *
    (1) * * *
    (ii) For negotiated acquisitions, by the close of business on the 
fifth business day after receipt of the special notification from the 
contracting officer (see 15.503(a)(2)) of the apparently successful 
offeror, including--
    (A) Orders placed under multiple-award contracts where the 
contracting officer requested rerepresentation for the order (see 13 
CFR 126.801(d)(1)); and
    (B) Orders set aside for HUBZone small businesses under multiple-
award contracts that are not partially or totally set-aside or reserved 
for HUBZone small business concerns (see 13 CFR 126.801(d)(1)), except 
for orders and blanket purchase agreements placed under a Federal 
Supply Schedule contract (see 8.405 and 19.302(d)(5)); or
    (iii) By the close of business on the fifth business day after 
receipt of notification using other communication means when written 
notification is not required.
* * * * *

0
4. Amend section 19.307 by revising paragraph (e)(1) to read as 
follows:


19.307   Protesting a firm's status as a service-disabled veteran-owned 
small business concern.

* * * * *
    (e) Protest by an interested party. (1) An interested party (except 
contracting officers should see paragraph (f)(1) of this section) shall 
submit its protest to the contracting officer--
    (i) To be received by close of business on the fifth business day 
after bid opening for sealed bid acquisitions;
    (ii) To be received by close of business on the fifth business day 
after receipt of the special notification from the contracting officer 
(see 15.503(a)(2)) that identifies the apparently successful offeror 
for negotiated acquisitions, including--
    (A) Orders placed under multiple-award contracts where the 
contracting officer requested rerepresentation for the order (see 13 
CFR 134.1004(a)(3)(ii)); and
    (B) Orders set aside for service-disabled veteran-owned small 
businesses under multiple-award contracts that are not partially or 
totally set aside or reserved for service-disabled veteran-owned small 
business concerns (see 13 CFR 134.1004(a)(3)(i)), except for orders and 
blanket purchase agreements placed under a Federal Supply Schedule 
contract (see 8.405 and 19.302(d)(5));
    (iii) To be received by close of business on the fifth business day 
after notification by the contracting officer of the intended awardee 
for an order that is set aside for SDVOSBs under a multiple-award 
contract that was not totally or partially set aside or reserved for 
SDVOSB concerns. This paragraph (e)(1)(iii) does not apply to an order 
issued under a Federal Supply Schedule (FSS) contract;
    (iv) To be received by the close of the fifth business day after 
notification by the contracting officer of the intended awardee for a 
blanket purchase agreement that is set aside for SDVOSBs under a 
multiple-award contract that was not totally or partially set aside or 
reserved for SDVOSB concerns. This paragraph (e)(1)(iv) does not apply 
to a blanket purchase agreement issued under a FSS contract; or
    (v) To be received by the close of business on the fifth business 
day after receipt of notification using other communication means when 
written notification is not required.
* * * * *

[[Page 61337]]


0
5. Amend section 19.308 by revising paragraph (e)(1) to read as 
follows:


19.308   Protesting a firm's status as an economically disadvantaged 
women-owned small business concern or women-owned small business 
concern eligible under the Women-Owned Small Business Program.

* * * * *
    (e) Protest by an interested party.(1) An offeror shall submit its 
protest to the contracting officer--
    (i) To be received by the close of business by the fifth business 
day after bid opening for sealed bid acquisitions;
    (ii) To be received by the close of business by the fifth business 
day after receipt of the special notification from the contracting 
officer (see 15.503(a)(2)) that identifies the apparently successful 
offeror for negotiated acquisitions including--
    (A) Orders placed under multiple-award contracts where the 
contracting officer requested rerepresentation for the order (see 13 
CFR 127.603(c)(1)); and
    (B) Orders set aside for EDWOSB or WOSB concerns under multiple-
award contracts that are not partially or totally set aside or reserved 
for EDWOSB or WOSB concerns (see 13 CFR 127.603(c)(1)), except for 
orders and blanket purchase agreements placed under a Federal Supply 
Schedule contract (see 8.405 and 19.302(d)(5)); or
    (iii) To be received by the close of business on the fifth business 
day after receipt of notification using other communication means when 
written notification is not required.
* * * * *
[FR Doc. 2024-16282 Filed 7-29-24; 8:45 am]
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